By Roland Murphy for Arizona Builder’s Exchange
It’s been eight years since the last condo was built in Phoenix. Reluctance to re-enter the market is understandable, given the losses so many developers and investors took in the market downturn. While rental unit developments have returned and thrived, condos have remained a scant few, or in Phoenix’s case – nonexistent.
However, according to Rob Lyles, a partner with Deco Communities, improvements to downtown infrastructure, transportation options and quality of job opportunities make now an ideal time to reexamine opportunities.
Last week, the firm announced an expansion and new location for the Edison Midtown development. Now located at 3131 N. Central Ave., along the midtown light rail corridor, the 110-unit, $40M project on the corner of Central and Monterey will include five residential floors and two floors of above-grade parking. Units will offer an 808SF one-bedroom and three two-bedroom layouts ranging up to 1,397SF.
The concept is described as, “A dynamic urban community; a place that fosters socializing and sharing that integrates seamlessly with Midtown’s vibrant city life.”
Amenities will include an urban courtyard, pool, spa, fitness center, Wi-Fi-equipped common areas and charging stations for electric cars. Prices are expected to start at $240K.
Signs of the Times?
A key influencer for Deco Communities’ decision to step into new condo development, Lyles said, is the per-unit price escalations and shortening turnaround times other, existing, condo projects in the downtown area have seen recently.
“You can look at the days on the market for all these projects, and they’re selling quickly. When they’re selling quickly and prices are rising, that tells you that there’s a pretty strong demand factor for new construction,” Lyles said.
Retail prices at downtown’s One Lexington condos have moved up to around $300/SF, while prices at the Portland Place condos are even better at $350-$375/SF.
“Those are good indicators that new construction can now come in and do very well in the market,” he added.
Even with those indicators, getting a new condo project built is not the simplest proposition in Valley real estate.
No Appetite for Condo Financing
“The barriers to entry are pretty difficult,” Lyles said. “It’s hard to get a project of this (Edison Midtown) size approved by the lenders and into the marketplace right now.” Edison may become a proof of concept for the market overall.
Lyles’ hope, and Deco Communities’ gamble, is that if Edison Midtown units sell quickly, it will draw other developers into the condo scene and, potentially, encourage local lenders to reenter the market.”Right now they’re in the ‘show me’ phase simply because a lot of them were burned so much in the past housing market,” he said.
Lyles is confident about the project’s potential and is enthusiastic about bringing it to fruition.
Planning is about to become reality, as the project is scheduled to break ground in September and be ready in approximately 12 months.
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